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Global growth expectations are near all-time lows, according to the latest Global Fund Manager Survey (FMS) conducted by Bank of America.
Growth expectations are up only >40pps from recent all-time lows. 87% of money managers expect inflation to fall while 60% of CIOs told their CEOs to reduce debt.
The survey results also showed that investor positioning is in “doesn’t get much worse” territory, BofA’s strategists told clients in a note. Cash levels are at the highest since April 2001 while investors are 3 standard deviations Underweight equities, which begs for “another bear rally.”
“We still say “big low,” “big rally” in H1’23 when Fed cuts become consensus (28% expect lower short rates in Oct FMS),” the strategists added.
They also noted that FMS showed both macro and investor capitulation are done while policy capitulation is only starting.
“At all “big lows” investors forecast rate cuts; FMS expectations of lower short rates was 5% in March, now 28%, was 65% at prior “big lows”; most investors since Nov’08 expect lower bond yields next 4Qs but FMS says US PCE deflator 4% needed for Fed pivot,” they added.
Overweight cash, utilities, staples, and the dollar remain the most crowded trades, alongside short stocks, GBP, Eurozone, and tech.
